Carbon credit/offset
A carbon credit, also referred to as a carbon offset, is exchanged between private entities within the voluntary carbon market. These credits are issued by carbon crediting schemes and symbolize the reduction, removal, or prevention of one ton of CO2e. Carbon credits or offsets undergo a unique serialization process and are managed, issued, monitored, and canceled through an electronic registry.
The two primary categories of carbon credits or offsets are removal credits and avoidance credits. Removal credits originate from projects that actively eliminate CO2 from the atmosphere, either through natural means such as reforestation or habitat restoration, bioenergy or soil carbon enhancement, or through technological solutions like direct air capture technology with geological storage. On the other hand, avoidance credits result from initiatives that prevent the release of CO2 into the atmosphere initially. This is often achieved by replacing fossil fuels with renewable energy sources or by supporting biodiversity preservation projects.